The cost of a bottle of wine is about to get more expensive despite the Chancellor's proposed 'Brexit' pubs guarantee set out in Wednesday's spring statement.
Jeremy Hunt announced that the duty charged on draught pints is to be frozen to help “the great British pub”, but drinkers will see tax on other alcohol soar by 10.1% in August. This is in line with inflation after a freeze during the peak of the cost-of-living crisis.
The price of a bottle of wine could increase by around 44p due to this. In a separate tax hike, the price of a 20-pack of cigarettes went up by £1.55 to £14.39 as of 6pm on Wednesday night following the tobacco tax hike, which saw cigarette levies go up by 10.1 per cent in line with the Retail Price Index (RPI), plus an extra minimum 2 per cent applied to pre-rolled tobacco products, the Sun says.
The duty on pints in pubs will drop to up to 11p lower than in supermarkets due to the freeze on draught pints, though. Mr Hunt said: "In December, I extended the alcohol duty freeze until August 1, after which duties will go up in line with inflation in the usual way.
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“But today, I will do something that was not possible when we were in the EU and significantly increase the generosity of Draught Relief so that from August 1 the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets, a differential we will maintain as part of a new Brexit pubs guarantee." He added: "British ale may be warm, but the duty on a pint is frozen."
However an increased duty on higher strength drinks is also due to be ushered in as part of reforms of alcohol duty announced in 2021. This will mean a 44p increase in the price of a bottle of wine with an ABV of more than 12.5%, according to the Wine & Spirits Trade Association (WSTA).
Meanwhile a bottle of vodka could rise by 76p. Some drinks will reduce in price, with 14p off a 5% pre-mixed can of gin and tonic and 7p off sparkling wine at 12%.
British Beer and Pub Association (BBPA) chief executive Emma McClarkin said: “The cut to draught duty as part of the alcohol duty reform is positive and we hope that it will result in a boost for our pubs this summer. However, the fact is our industry will be facing an overall tax hike, not a reduction, come August.
"Duty on non-draught beer will rise and the measures introduced today won’t rebalance the catastrophic impact soaring inflation and unfair energy contracts are having on both pubs and the breweries that supply them. As the 1st of April rapidly approaches, businesses are also nervously awaiting what’s next for their energy costs and a lack of support in today’s announcement will have a direct impact on their ability to keep their lights on and doors open.
“The Chancellor highlighted how our pubs are the most treasured community institution and we appreciate his efforts to provide some relief, but a lack of immediate support in today’s Budget will still put the future of many of them at risk.”
UKHospitality chief executive Kate Nicholls said: “The reduction in draught duty is positive and we hope this will incentivise more visits to our pubs, restaurants and hotel bars. Addressing draught duty is a good start and I would urge the Government to consider rolling out this type of tax cut across the wider drinks market.
“With duty primarily paid by suppliers, such as breweries, it’s essential that any benefit is passed through to venues to help deliver the Government’s objective of reducing inflation and growing the economy.”
The BBPA said UK beer duty was 12% higher than Germany’s and £1 in every £3 was paid to Treasury in tax.
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